U.S.-Russia ties take a hit

Dec 15, 2012

Alexander Gasyuk

The recently adopted Magnitsky Act may serve as a barrier to further developing U.S.-Russia ties, including trade. Source: AP

With the Jackson-Vanik amendment finally repealed and the controversial Magnitsky Act signed by U.S. President Barack Obama on Friday, the new legislature provokes similar response from Russia and may hamper U.S.-Russia relations.

The repeal of the Cold War era Jackson-Vanik amendment,
which limited trade with Russia and was a roadblock in relations, should be
seen as an historic feat. The legislation was sent from Capitol Hill to the
White House on Dec. 7, and President Barack Obama has signed
the legislation on Dec. 14.

But Russian and some American officials aren’t lining up to
celebrate the long-awaited permanent normalization of U.S.-Russia trade
relations, since the provisions of the Sergei Magnitsky Rule of Law
Accountability Act, long linked to the trade bill, will also become law. The
new sanctions against some Russian citizens could sour relations for months to
come.

The linkage of the two bills was passed with overwhelming
bipartisan support in both the House of Representatives and the U.S. Senate
despite repeated warnings from Russia’s Foreign Ministry that the
bill would “negatively affect prospects of bilateral cooperation.”

During the second week of December, Moscow came up with its
own legislation to be named after a Russian adopted child who died of heat
stroke when his American father left him in his car for nine hours. The Dima
Yakovlev Act will contain a list of categories of Americans that will not be
allowed into Russia. This bill is likely to pass as well.

But this is not how the Obama administration wanted this to
play out.

“We can be sure that Obama
will want to continue to seek a genuinely cooperative partnership with Russia,”
said Sam Charap, a senior Fellow for Russia and Eurasia at the International
Institute for Strategic Studies.

“But Moscow has shown little interest in this
relationship since Putin's return to the Kremlin," he added. "So the real question is: How
will Putin handle U.S.-Russia relations under Obama's second term? Will he put
the campaign-driven anti-Americanism and blasé attitude toward a president in
the last year of a term behind him, and respond to the administration's
initiatives? Or will he continue the status quo?”

Some American lawmakers on the
Hill, where the legislation was passed by 92 to 4 in the Senate and 365 to 43 in the House, also
downplayed the consequences of a vote that Moscow labeled a “spectacle in
the theater of absurd.” The Foreign Ministry had promised a “mirror response.”

Rep. Adam Smith (D-WA) who voted for the legislation, said
in an interview that he is still looking forward to working with his Russian
counterparts in the State Duma.

“There is no relationship in the world without
differences,” he said.” We have concern about human rights in Russia. But we
will continue to work with your country.”

On the eve of the Senate vote there was uncertainty
regarding the focus of the bill’s “targeted sanctions”–some key lawmakers
behind this push, including its main backer Sen. Benjamin Cardin
(D-MD) – initially wanted the scope of the bill to be global. But, in the end,
the only target was Russia.

Sen. Benjamin Cardin (D-MD) is among one of the main backers of the Magnistky Act. Source: AP

“American lawmakers today rarely come together on
certain issues because of very partisan debates on key domestic policy topics,”
said one Congressional staffer who did not want to be named. “But bashing
Russia is something that everybody on the Hill can afford. Doing the same thing
regarding China or Saudi Arabia where human rights leave much more to be
desired compared to Russia is politically very complicated.”

However David Kramer, president of the Washington D.C.-based
human rights watchdog Freedom House and an outspoken supporter of the Magnitsky
Act, said that, “next year Congress should apply this model to human rights
abusers in other countries where there is impunity for such violations.”

The human rights community has already suggested that the
legislation be expanded to include Ukraine, Belarus and Central Asian states.

If the Magnitsky Act is signed before the end of this year,
the black list of Russian officials - deemed responsible in some way for the
tragic death of attorney Sergei Magnitsky in prison - will become public
in in about 120 days. The number of American visa and financial sanctions will
most likely apply to a much broader number of persons than those allegedly
involved in the Magnitsky case.

The bill provides an opportunity to go after “other gross
violators of human rights” and gives the chairmen and ranking members of
certain congressional committees the right to send written requests to the
government agencies that certain individuals be added to the “stop list.”

Russian opposition leader Boris Nemtsov, who has supported
the legislation, told RBTH that “this law is much wider than just the Magnitsky
list.”

“Now we have a great opportunity to put a lot of people on
this list,” he said.

Russian Minister of Foreign affairs Sergei Lavrov has warned
of both symmetric and asymmetric responses to new U.S. sanctions against
Russian citizens.

The Dima Yakovlev legislation in Russia will also
prohibit some Americans from doing business or holding investments in Russia.

There is politics, and then there is business

RBTH has also learned that some of the American lawmakers
who were proactive in pushing the Magnitsky Act through Congress may be
included on a Russian “black list.”

Russian First Deputy Prime Minister Igor Shuvalov said that
he hopes that Russian retaliation won’t affect the interests of the American
business community because of the Magnitsky Act.

“Russia is preparing its response,” Shuvalov said at the
recent 2012 New York Stock Exchange Russia day. “But this is the political side
of U.S.-Russia relations and may affect some American officials. It’s not about
business people.”

The U.S. business community has focused on the trade
dimensions of the U.S. legislation and is urging Obama to sign this measure
into law as soon as possible.

"This is an historic step that the business community
has worked long and hard to achieve,” President and CEO of the U.S.-Russia Business Council Edward
S. Verona told RBTH.

Related:

Like their competitors from other World Trade Organization
member countries, American companies will now be able to take full advantage of
the opportunities created by Russia's membership. This could lead to a doubling
of U.S. exports in the next five years to approximately $20 billion, according
to some estimates.

Similarly, Russian companies will enjoy improved access to
the United States market, where Russian steel, titanium and fertilizers have
already had considerable success.

“I believe that this will increase our mutual stakes in a
more stable economic and commercial relationship, which bodes well for overall
U.S.-Russia relations." Verona said.